Think of your favourite businesses. These are brands you love and buy a lot of products from. Businesses where you are very likely among their top 20% customers. Think about whether you get a differentiated experience. Think of they have asked you for referrals to your family and friends so they get more customers like you. Think if the business will know if you switch to competition – will they call you?
We are all Best Customer of many businesses – either in terms of what we spend each year or the longevity of our relationship with the business. And yet, few created those customised experiences that show they know us and value us – as their Best Customers. For most businesses, we are just like every other customer.
Would we not spend more with businesses that provided us ease and exclusivity in our experiences? Would we not recommend such businesses to others? Why then do our favourite businesses not recognise us and make us feel special? In a world where we leave such a big data trail, why do they not personalise experiences for us, their Best Customers? Why are they okay if we churn to an alternative? Why do they not practice Velvet Rope Marketing?
For businesses, VRM is about creating differentiated experiences for the top 20% (Best Customers). It does not mean ignoring the long tail of 80% (Rest Customers). It just means that there is a disproportionate focus on ensuring the Best Customers are identified, retained, pampered and persuaded to maximise their spend. In fact, Best Customers can even be encouraged to drive referrals to get others like them.
Marketing technology (martech) can today automate many of these activities. Integrating martech with advertising technology (adtech) can also reduce the cost of new customer acquisition (Next Customers) – instead of acquiring everyone, the focus can shift to acquiring Next Customers with attributes like the Best Customers. This can create a “profits flywheel” with even greater growth in future profits.
Implementing VRM right is the secret to creating an invincible business. By building a double moat of getting the industry’s Best Customers and then maximising revenues from them, it becomes possible to create a profits monopoly (profipoly) which can cut off the oxygen that competition needs to grow.
The idea of VRM is not new. What’s different is how technology can now automate many routine customer engagement tasks to create magical customer experiences that treat Best Customers like royalty to drive greater loyalty and spending. VRM applies whether you run a B2C or B2B business. Even if your business has characteristics where every customer pays the same (a subscription business), you can use surrogates like engagement to identify who your Best Customers are and then give them a better experience that fosters upgrades, longer lifetime spending and more word-of-mouth marketing.
Think of VRM as Very Real Magic – accelerate the turning of the data and profits flywheel to create an invincible business and an enduring great company.